Damning stuff re GT

Para 150

Didn't find your answer?

TC 09023.pdf (tribunals.gov.uk)

https://financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j12931/TC...

But despite that, all was not lost re penalties per paras 208 & 209.

Also, helpful comments re LR connection test. 

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RLI
By lionofludesch
17th Jan 2024 13:04

Highly reputable.

But wrong.

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Replying to lionofludesch:
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By Justin Bryant
17th Jan 2024 13:46

But GT were not just wrong; they were negligently wrong per the judge (but that's OK to avoid taxpayer penalties for carelessness). (This is the sort of thing DN loves to bang on about.)

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By Ruddles
17th Jan 2024 13:31

What is particularly interesting is the Judge's view that unallowable purpose treatment results in the same outcome as a connected companies scenario. This is certainly news to me as I am not aware of any legislative provision that says that such a credit may be ignored (except for FOREX credits). Speakers have often commented on the potential for the worst of both worlds - no relief for the lender but a taxable credit for the borrower.

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Replying to Ruddles:
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By Justin Bryant
17th Jan 2024 13:34

Not sure what you mean. LR unallowable purpose test is a stand alone test for whether a LR debit is allowable (i.e. CT deductible) or not (assuming it is otherwise allowable). No more, no less. The judge got it 100% right here as far as I can tell.

Contrast if the loan waiver had been for an employee for example as a bonus etc.

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Replying to Justin Bryant:
By Ruddles
17th Jan 2024 13:56

102. If a loan relationship has an unallowable purpose, then, to all intents and purposes, the same situation arises as in a connected company loan relationship. The release of a debt is tax neutral. The borrower takes no debit, the lender accounts for no credit.

As far as I am aware that last sentence is wrong (ignoring the fact that the Judge has got the debits and credits the wrong way round).

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Replying to Ruddles:
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By Justin Bryant
17th Jan 2024 14:08

He's just simply got that bit wrong (and it's not relevant to the decision), so that's hardly interesting.

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Replying to Justin Bryant:
By Ruddles
17th Jan 2024 14:23

It is a lot more interesting to me than many of your so-called 'interesting' tax cases, which are often of no relevance whatsoever to 99% of members here.

The mere fact that the Judge appears to have got something so basic so wrong does raise the question as to what else he may have gotten wrong.

I found the point of interest because my immediate thought in reading the Decision was why did HMRC not go straight for the unallowable purpose point, with the connected company issue as back-up, since the former was likely to result in an overall better result (taxable credit, non-allowable debit rather than both Dr and Cr being ignored). Perhaps HMRC also believe that an 'unallowable' (non-FOREX) credit can be ignored?

I am far more interested in something that I may come across in practice than a Judge's criticism of another accountancy firm.

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Replying to Ruddles:
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By Justin Bryant
17th Jan 2024 14:33
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RLI
By lionofludesch
17th Jan 2024 13:47

Nigel Popplewell?

Used to play for Somerset?

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Replying to lionofludesch:
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By Justin Bryant
17th Jan 2024 13:48

Yes; that's him.

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Replying to Justin Bryant:
RLI
By lionofludesch
17th Jan 2024 13:55

He should have a good grasp of fair play.

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